What's going wrong (and right) with aquaculture in China and Africa?

Dave Little, a professor of aquatic resources and development at the University of Stirling (U.K.), has performed extensive research on aquaculture in Africa and Asia. In an interview with SeafoodSource, Little discussed how changes in market demand are shaping Chinese aquaculture and why Africa is struggling to meet its potential as an aquaculture producer.

SeafoodSource: Chinese officials frequently complain that Chinese aquaculture production is inefficient, but is that reality?

Little: China has several advantages it downplays. It has low labor costs and in many cases cheap sub-contractors to move and harvest the fish. There’s a vast domestic market and there’s a vast amount of product coming in. They have the best of both worlds. They’ve also got huge cold storage capacity, so you have the whole package. While it’s true there is much fragmentation in Chinese aquaculture, there’s also good infrastructure allowing movement of goods.

SeafoodSource: With so much focus recently being placed on rising Chinese consumption, can aquaculture there keep up and satisfy demand?

Little: The challenge for China is how to modernize not just production, but also consumption.

To meet rising Chinese demand, there needs to be an emphasis on low-trophic species. Surely, the big task for China is to consume more carp. We had a research student who went to Hubei in 2016 and saw very interesting trends on carp aquaculture. People in Hubei are moving out of carp and into crayfish. You see Chinese crayfish, being served in airport sandwich bars… People there eat a lot of crayfish. It’s a product that China has a major advantage in.

Online e-retail in China has been taking the world by storm. There are now different distribution systems and we face a future with a lot of seafood being moved around world by air. That will also help with both fueling demand and improving production efficiencies.

Little: It’s not growing as fast as some predicted, but it’s nothing like North America, where demand for tilapia is down 15 percent. In terms of production, Tongwei and other firms in China are now doing things differently, but in tilapia [consumption] you can see how different China is to Thailand. I think in Thailand, the convenience food sector is far more advanced. CP [Charoen Pokphand] has really taken it by the horns and almost created demand. Hence you see microwave products on the shelf with 50 types of chicken. In most households in Thailand, fewer people are cooking in traditional styles in kitchens – they are now using microwaves. But the fresh fish thing is sticking around in China, which may be impeding a rise in the consumption of tilapia.

SeafoodSource: Do you expect lower-end species like tilapia to be replaced by production of grouper and other high-end species?

Little: There’s been a lot of nibbling around the edges. Taiwan has been doing grouper for [a very long time]. There’s also been a lot of grouper production in Southeast Asia. Depending on the species, you can do it. Some will happen faster than others. Thailand was pushing barramundi production for a long time. But if you look at the overall market, there’s a limited number of people who can afford that.

The big challenge is use of feed. Fishmeal prices are already up on China’s demand. That would be increased further if China shifts to species dependent on that [fishmeal]. Or the alternative is omega oils such as rapeseed and algae which could be suitable for some species. There’s a limited amount of omega oils for food. The key is the price point.

You will need companies who can do genes and feed together. It has happened with tilapia and pangasius, which don’t need fishmeal. But the need for fishmeal for carnivores like grouper will limit the size of the market and prevent investment in carnivores. Cobia is fast-growing, but it eats a lot [of fishmeal]. Production is not ready for replacement feed like soy.

Market development is very important. The danger is people see grouper as no longer a luxury food. Hence you have to figure out: At which point do you have volume at the right price? What keeps the price high is that it’s not an everyday product, and when you take that away and you can knock it out in volume, everyone’s margins go down and only the big guys can do it. This would not be a good thing for poor Thai farmers currently producing small volumes of grouper.

SeafoodSource: Where is Africa in relation to Asian aquaculture?

Little: Africa is a long way behind, though [the level of development] depends on the geography. Egypt is reaching a level of intensification in production of tilapia, which is a very efficient source of protein for poor Egyptians.

In Ghana, there is some intensification of tilapia farming there. But Chinese tilapia is coming in and undermining prices. Imports are mostly going into countries where there’s a tilapia industry already. I think exposing African seafood products to global economics is a good thing. The issue is: Can they compete? Right now, locals can’t afford Ghanaian cage-produced tilapia. Many African producers are taking a hit on their margins to compete with China. This is a good thing because it keeps prices affordable - the competition results in lower prices.

The [fish] genes that China uses are so much better than those which Africa uses. Chinese pond production is phenomenally efficient. In places like Maoming [an aquaculture hub in Guangdong Province], people have vast choice species. In Ghana there is one [species]. You also hear other arguments about [the quality of African ports] and also how Africa has low buying power for feed. China has advantages of scale.

Currently, if you set up in Africa, you have to be very efficient or very far from Chinese imported fish. Malawi has, over the last 30 years, tried to build a tilapia sector, but there are only clusters left. It has relied upon imports of feed from Zambia and on subsidies or aid. It also has to do with the competitiveness of the local economy and connectedness. These are reasons why it has developed slowly. You have to ask: Who can make a margin in that value chain?